What Does The Latest Interest Rate Drop Mean For You?

We hope you’ve had a terrific start to 2015.

The RBA dropped interest rates yesterday by 0.25%, part of me is shocked and part of me is not. This will of course be great news for home owners and investors as the cost of holding property will reduce. For people that are in their retirement years this will be of concern as savings rates will be slashed.

So what should you do with the interest rate discount you are about to receive?

  1. Either pay down any credit card debt or personal loans
  2. Invest in assets that will yield a high cash flow
  3. Keep your mortgage payments at the same level to help reduce the loan term
  4. Now is also a great time to build up some reserves, the old saying that you need 3 months savings, should now be changed to 12 months. This will provide you with a strong buffer if there is ever a move in the other direction with interest rates.

This can be a great time but remember what the greatest investor of all time once said:

“Only when the tide goes out do you discover who’s been swimming naked.”

– Warren Buffett

Should you have any questions about your current home loan or if you are thinking of refinancing/debt consolidation or buying a new property please give my office a call on 1300 090 298.

Have a great week.

Martin Bennett